from the thumbing-your-nose-not-such-a-good-idea dept

We had mentioned in passing that wacky Aereo-wannabe FilmOn, run by the eccentric and frequently ridiculous Alki David had declared itself a "cable service" following the Supreme Court's Aereo ruling -- though we pointed out that anything that FilmOn or Alki David says should be taken with a very large dose of salt. Unlike Aereo, who is trying to follow all of the procedures to make sure that it can be classified as a cable service to pay retransmission fees under Section 111, FilmOn just announced that it was a cable service and kept on streaming. And, not surprisingly, one of the courts that had already ruled against FilmOn has found the company in contempt. It probably did not help that the case was before the very same judge who ruled that ivi couldn't qualify as a cable company.

The judge here... is not happy. Judge Naomi Reice Buchwald totally dismisses the idea that the Supreme Court's ruling in Aereo (where it says Aereo is a cable company) actually means that any internet company qualifies for Section 111 compulsory retransmission rates. Basically, we're back to the quantum CATV where it's a cable system for some parts of the law, but not for others.

FilmOn’s second argument is also unavailing because it
hinges on a mischaracterization of the holding in Aereo.
Defendant is correct that, throughout the Aereo opinion, the
Court likened Aereo to a cable company.... But defendant
attaches far too much importance to the Court’s analogizing. A
series of statements that Aereo (and, by extension, FilmOn,
...)
is very similar to a cable system is not the same as a judicial
finding that Aereo and its technological peers are, in fact,
cable companies entitled to retransmission licenses under § 111
of the Copyright Act. Defendant may argue that the Supreme
Court’s language in Aereo implies that FilmOn may be entitled to
a license under § 111, but an implication is not a holding.

Once again, it seems that David's brazen and brash responses to legal setbacks are leading to bad law. It's been suggested more than a few times that David's real role here is to be the buffoonish version of Aereo, basically underminding Aereo's much more sound legal reasoning and arguments at every turn, and that may be true again here. The court slams FilmOn for basically lying to the court in claiming that it didn't mean to stream its content into NY where the injunction from this court blocked it. However, the court points to FilmOn's own press release... which "boasts that defendant's
mini-antenna technology continued to make available to FilmOn
subscribers across the country the local broadcasts of eighteen
major American cities, including New York."

The court, at the very least, points out that Aereo seems to understand how this process works, and has temporarily shut down its operations, but FilmOn just kept streaming. Furthermore, the court points out that, as Aereo is attempting to do, to make use of Section 111, you need to first get a license from the Copyright Office.

FilmOn does not have, and has
never had, a license from the Copyright Office. Indeed,
defendant admits that it did not even apply for a cable license
until July 10, 2014, after plaintiff submitted this order to
show cause -- a fact that undermines any claim by defendant that
it was truly committed to complying with the letter of the law.... Fundamentally, FilmOn cannot choose
to ignore the Injunction merely because it anticipated someday
being able to retransmit plaintiffs’ content legally.

The court then goes on to point out that the Copyright Office itself has said it doesn't think the Supreme Court's ruling has any impact on the ivi ruling and rejected FilmOn's (and Aereo's) request to be granted a license.

Not only is hope no defense to the violation of an
injunction, but defendant’s faith that the Copyright Office
would grant it a cable license was misplaced. On July 23, 2014,
the Copyright Office, citing ivi, expressed its view that
FilmOn, as an internet retransmission service, “falls outside
the scope of the Section 111 license,” and that the Office did
not “see anything in the Supreme Court’s recent decision in
[Aereo] that would alter this conclusion.” ... Thus, not only was FilmOn’s
expectation of a license irrelevant, but it was erroneous as
well. Moreover, even if the Copyright Office had granted a
license to FilmOn, this development would not have excused
defendant’s decision to preemptively stream content in violation
of the Injunction. The Copyright Office’s decision does,
however, provide additional support for our conclusion that
FilmOn’s use of the mini-antenna technology clearly falls within
the ambit of the Injunction, and defendant should be held in
contempt for willfully violating its terms.

The judge also calls out David himself for contempt, and in the end orders FilmOn to pay $10,000 per day for nine days. It calculated the nine days from the day Aereo shut down its service until FilmOn also shut down it's offering. Thus a total of $90,000, but it also says the networks can get attorneys' fees as well, so that could add up.

There are legitimate legal questions about whether or not the ivi ruling is still valid, and whether or not an internet streaming company can qualify for Section 111 retransmission rates. But the last company that should be in court defending that position is FilmOn.

from the quack-quack dept

As we've been discussing, following the Supreme Court's decision that said Aereo was a cable service solely because it looked like one, and therefore had to pay retransmission fees, we warned that this would lead to a legal mess. Some people insisted Aereo could just start paying retransmission fees, but we wondered how that would fit with the ruling in the ivi case, that said internet companies didn't qualify for statutory licenses on retransmission fees, because internet companies are not cable companies.

Aereo made a filing with the court that basically said that given the Supreme Court's "look like a duck" test finding it a cable service, it seemed pretty clear that the ivi ruling was overturned, and thus it now wants a statutory license to pay retransmission fees. In addition to telling the court this, Aereo also filed with the Copyright Office its application to be eligible for those fees, leading the Copyright Office to send back a somewhat passive aggressive letter saying that it will "accept" the letter "on a provisional basis" but refuses to "process" it because, in its opinion, the ivi ruling means Aereo cannot be a cable company and nothing about the Supreme Court calling Aereo a cable company changes its opinion of that fact.

In the view of the Copyright Office, internet retransmissions of broadcast television fall outside the scope of the Section 111 license. Significantly, in WPIX, Inc. v. ivi Inc.... the Second Circuit deferred to and agreed with the Office's interpretation of Section 111. As explained in that case, Section 111 is meant to encompass "localized retransmission services" that are "regulated as cable systems by the FCC." ... We do not see anything in the Supreme Court's recent decision in American Broadcasting Cos. v. Aereo Inc.... that would alter this conclusion.

So... despite the fact that the Supreme Court ruled, pretty directly, that Aereo matches all the important criteria of a cable company to be covered by the laws that regulate cable company retransmissions, the Copyright Office is going to standby the ivi ruling that internet companies can't be cable companies. As reader Gwiz pointed out last week, it's Schrödinger's CATV. When the Supreme Court looks at it for the purposes of making it infringement, it's a CATV. When the Copyright Office looks at for the sake of actually paying those retrans fees, it's no longer a CATV.

What's perhaps even more troubling here is that there is no reason for the Copyright Office to weigh in here. As is noted in the letter, this issue is currently going to be determined in the courts, and the Copyright Office doesn't need to do anything. But, instead, for no clear reason, it decided to offer its opinion and explain why it won't "process" the letter. Either way, we're left in a situation in which the Supreme Court's ridiculous "quacks like a duck" test is creating confusion.

from the let's-pay-up dept

In the wake of the Aereo ruling, I'd been meaning to do a post questioning whether or not the ruling had effectively overturned the ruling in the ivi case from a few years earlier. We had seen some people in our comments point out that, following the Aereo ruling, Aereo had an easy solution: just start paying retransmission fees. Except... that's exactly what ivi had tried to do, and the court had shut them down, using almost the opposite reasoning as the Supreme Court. Specifically, the Second Circuit appeals court (the same that had decided in Aereo's favor) ruled that internet services were not cable companies under the law, and couldn't just pay retrans fees:

Congress did not, however, intend for Section 111's
compulsory license to extend to Internet transmissions.
Indeed, the legislative history indicates that if Congress
had intended to extend Section 111's compulsory license to
Internet retransmissions, it would have done so expressly --
either through the language of Section 111 as it did for microwave
retransmissions or by codifying a separate statutory
provision as it did for satellite carriers. See 17 U.S.C.
§§ 111, 119.

Extending Section 111's compulsory license to Internet
retransmissions, moreover, would not fulfill or further
Congress's statutory purpose. Internet retransmission
services are not seeking to address issues of reception and
remote access to over-the-air television signals. They
provide not a local but a nationwide (arguably
international) service.

Accordingly, we conclude that Congress did not
intend for Section 111's compulsory license to extend to Internet retransmissions.

So, uh, which is it? Aereo has now decided that if the Supreme Court is going to call it a duck for looking like a duck, it's damn well going to quack like a duck too. It has told the lower court that it intends to pay retransmission fees under Section 111, more or less claiming directly that the Supreme Court overruled the ivi ruling. For what it's worth, Aereo's "wacky" (but seriously questionable) "competitor" FilmOn, already made a similar declaration of being a cable company, though as we've learned with FilmOn, you should take almost every claim it makes with a huge grain of salt.

Of course, this is a big problem with the Supreme Court's ruling. By coming up with this wacky "looks like a duck" test, it's encouraging companies like Aereo to use that test in a variety of ways, even though copyright law has never worked that way. Lots of things that "look like" each other face different rules: think of terrestrial radio and internet radio stations. Under the "looks like a duck" test, internet radio stations should be able to declare themselves the same as terrestrial radio stations and stop having to pay performance fees to musicians.

And, of course, the networks themselves don't like Aereo embracing the duck, even though the company is only doing so because of the network's own lawsuit.

On July 1, however, its counsel suggested that Aereo has rethought its entire legal strategy and will raise before this Court a brand new defense based on Section 111 of the Copyright Act. Aereo never before pled (much less litigated) Section 111 as an affirmative defense. Whatever Aereo may say about its rationale for raising it now, it is astonishing for Aereo to contend the Supreme Court’s decision automatically transformed Aereo into a “cable system” under Section 111 given its prior statements to this Court and the Supreme Court.

But it's not Aereo that made that decision. It's pretty clearly the Supreme Court and its stupid "looks like a duck" test. The entertainment industry might want to be careful what it wishes for. It applauded the dreadful looks like a duck test, and now it's freaking out when Aereo actually tries to apply it.

from the interesting-legal-theory dept

Back in April, Aereo won its appeal, saying that its system to allow people to watch broadcast TV over the internet, via an individual antenna (each customer gets their own antenna) is not infringing. As we've said, this is basically an argument of whether or not the length of a cable turns non-infringing activity into infringing activity. Everyone agrees that it's legal to put up your own antenna and watch broadcast TV. For the most part, it's recognized (though not universally agreed) that you can "place shift" the authorized TV that you watch to another place. This is basically what Aereo was doing. But, the networks, completely freaked out that this might mean the very large fees the cable providers pay them for retransmission might go away, insist that this must be illegal, because, basically, they really like the money they get from cable companies and anything that takes away that revenue stream must be illegal. Except, both the district court and the appeals court rejected that, in large part relying heavily on the important Cablevision ruling, which allowed Cablevision to offer a remote DVR service to its customers.

The networks, of course, asked the appeals court to rehear the case en banc (with a full panel of 11 judges, rather than just the 3 who heard the case initially). That's now been rejected, but Judge Denny Chin, who has a bit of a history siding with the TV guys against upstart innovators is pretty upset about this. Chin was the dissenting judge in the original ruling on Aereo, and he's also the judge who ruled against ivi -- a startup that tried to do something somewhat similar to Aereo, but through different means. Also, before Chin was on the appeals court, as a district court judge, he made the original ruling in that key Cablevision case, in which (shocker) he sided with the networks over Cablevision. In other words, every time this kind of issue has come up, Chin sides with the broadcasters and against the innovators.

Chin's dissent from the decision to reject an en banc rehearing is quite incredible. I saw someone quote the following line, which I had through was a joking paraphrase of Chin's argument, but this is verbatim from the dissent:

That's a fairly startling admission. Here's a precedent, and the judge is saying that the company can't rely on the precedent because he doesn't agree with the precedent. That's not how this is supposed to work. Yes, Chin may have had his feelings hurt because the appeals court overturned his original ruling in Cablevision, and now the other judges have gone against him, but that does not mean he gets to simply ignore the ruling because he doesn't like it.

Most of Chin's dissent is basically a close copy of the networks' arguments, which is, again "the networks make money this way, and how dare some company undercut their business model." This is kind of weird. The very nature of disruptive innovation is that it often undercuts existing business models. But that's called competition. It's not supposed to be illegal. Chin also approvingly cites his own ruling in the ivi case, where he accepted -- without question and with no factual basis beyond the claims of the networks -- that allowing such startups to thrive would harm their rights.

But, the crux of his argument is simply that he's feeling hurt that his Cablevision ruling got overturned, and even if it's precedent, Aereo shouldn't be able to rely on it, because Chin wants to overturn it:

The panel majority's decision is based entirely on
Cablevision. In my view, however, as some of the
broadcasters argue, Cablevision was wrongly decided. Of
course, I was the district judge in Cablevision, and I
recognize that the panel was bound by the Court's decision
in Cablevision, to the extent the decision is controlling. But rehearing these cases en banc would also give the Court
the opportunity to reconsider Cablevision.

Basically, I lost last time around, and even though Aereo is relying on the winning side, that shouldn't be allowed, because I'm still bitter that I lost, and I'd like to overturn Cablevision first, and then use that to shut down Aereo too.

It's difficult to see how this is an unbiased judge, looking at these cases impartially.

from the insanity-defense dept

A little over four years ago, we wrote about the Second Circuit appeals court's ruling in the case over the legality of Cablevision's remote DVR. As we said at the time, the court came to the right result -- the remote DVR was perfectly legal -- but had to twist itself into all sorts of crazy contortions to make that argument fit within the confines of copyright law. That's because of the nature of copyright law itself, which is almost always reactive to technological changes and, because of that, always gets twisted up when important, useful and disruptive innovations come along. As we noted four years ago, copyright law "is simply not set up" to handle something like a remote DVR. Even though a home DVR is clearly legal, and the only real difference between one at home and one in the cloud is the length of the cord between the DVR and the TV, the legal arguments to make them both legal are quite twisted.

Since then, we've seen a whole bunch of startups try to offer variations of streaming video online -- often relying on that quite twisted ruling in Cablevision. Each time we write about them -- companies like ivi, Zediva and Aereo -- we tend to note that all of them are doing incredibly inefficient and convoluted things on the back-end to try to stay within the confines of the law, as established by the Cablevision ruling. But to any objective observer considering what makes the most sense for a company and its users, all of the Rube Goldbergian designs of these companies seem entirely pointless. The goal is the same: to reasonably offer streaming services that match what people can do at home with a DVR or a DVD player -- but it has to be twisted to make that work within the whacked out language of the law.

And that's because the law is never written with innovation in mind. Quite the opposite. The history of copyright law is that every time something new comes along, Congress duct tapes on some new "right" to make it work. The 1909 Copyright Act was driven by the scary, scary invention of the player piano, which was going to wipe out the sheet music business or something. But the internet mucks with all of that -- in part by bringing together different roles that had previously been separate. The end result is that different aspects of copyright law may or may not apply, depending on where you sit.

Law professor James Grimmelmann has picked up on this and written an absolutely brilliant piece over at Ars Technica, where he dives into the nitty gritty details of all of this to explain how copyright law for streaming went insane. Here's the opening:

Suppose I could offer you a choice of two technologies for watching TV online. Behind Door Number One sits a free-to-watch service that uses off-the-shelf technology and that buffers just enough of each show to put the live stream on the Internet. Behind Door Number Two lies a subscription service that requires custom-designed hardware and makes dozens of copies of each show. Which sounds easier to build—and to use? More importantly, which is more likely to be legal?

If you went with Door Number One, then you are a sane person, untainted by the depravity of modern copyright law. But you are also wrong. The company behind Door Number One, iCraveTV, was enjoined out of existence a decade ago. The company behind Door Number Two, Aereo, just survived its first round in court and is still going strong.

The whole piece is totally worth reading. But it keeps going back to the same thing. Thanks to a combination of ridiculously antiquated copyright law and the 2nd Circuit's right result-but-for-odd-reasons ruling in the Cablevision case, we have a ridiculous setup where no one ever seems to take into account just what's happening for the end user, but rather focuses on the back-end to either jump through silly hoops (if you believe these services are legal) or to find questionable loopholes (if you're a copyright maximalist) to try to show that your service is legal. The end result is not only very bizarre, convoluted and inefficient systems that make no sense, and which no sane person would choose to set up as a business, but also one where we just see an ongoing stream of wasteful legal battles.

In talking about Zediva -- the company that set up individual DVD players in a data center which could stream only a single copy of an actual DVD playing at a time to a single user -- Grimmelmann again notes that none of this makes any sense:

And once again, it's a business model that would not exist in a world with copyright policy that was not demonstrably insane. Rapidly spinning optical discs make sense as a distribution technology because they're compact and durable. But they're a hassle and a half for playback, because they scratch, skip, and make random access a pain. If you're going to use the Internet for distribution, better to take the DVDs out of the picture and use them as coasters. But since Cablevision had opened up what seemed like a gap in copyright law, Zediva poured shiny lacquered discs into the breach.

Is there a way out of this that doesn't necessarily require a total dismantling of copyright law? Grimmelmann suggests that the more common sense (i.e., not insane) approach would be to actually look at what the end-user experience is:

Perhaps we can think about the problem of copyright on the Internet another way. Instead of asking which back-end technologies are legal, it might make more sense to ask what it is legal for users to do with computers on the front end. This approach would let people spend less time worrying about the exact definitions of "reproduction" and "performance" and more time thinking about users' rights, especially under fair use.

Cablevision itself illustrates what might have been. The whole point of the RS-DVR was that it was a perfect substitute for a home DVR. Reasoning by analogy, then, we might say that the two ought to either both be legal or both be illegal. And since home DVRs seem here to stay, it ought to be permissible for Cablevision to offer its customers exactly the same service they could have gotten by buying a gizmo. Call it "noninfringing personal fair use" and we can all go home.

Unfortunately, he notes that such a result wasn't possible in the Cablevision case, because Cablevision itself chose not to litigate the fair use issue in its case. End result? More insanity.

Of course, even Grimmelmann's solution potentially leads to some other issues, as well. For example, we've long argued that an embedded video on a website isn't infringing because it's no different than a link -- and that if there's infringement, it's from the uploader or hosting provider, rather than the intermediary who posted the embed code. But under Grimmelmann's "end user" analysis, then anyone who embeds could be liable as well, as to the end user, it wouldn't appear any different than a site that hosted the content. That raises some difficult questions as well.

But there's a reason for that: because these laws were designed for a very different era and very different technology. The concept of an open internet, and even something like an "embed code" is completely foreign to copyright law, meaning that it's legality is very much in the eye of the beholder. And really, that just serves to highlight the real problem here: copyright law isn't built for modern technology, and that's creating all sorts of problems for innovative services.

Either way, Grimmelmann's whole article is absolutely worth reading, so go check it out, even if it may make you bang your head repeatedly at the pure insanity of the situation we're in today.

from the of-course-not dept

While there's been a fair amount of focus lately on the legal status of Aereo, the company offering broadcast TV over the internet by setting up a bunch of individual antennas and letting people access them online, there's also the ivi case. ivi, if you don't remember, offered what sounds like a very similar service to stream broadcast TV over the internet (for a fee). However, it used a completely different legal theory, believing it had found something of a loophole in the Copyright Act; namely Section 111 which allows cable providers to rebroadcast content for a compulsory payment to the Copyright Office.

The district court was not impressed, and basically said that ivi was trying to do an impressive tapdance -- defining itself as a cable provider to be able to use Section 111, but then claiming it was not a cable provider under the Communications Act. On appeal, ivi has lost again (pdf and embedded below), as the appeals court went a simpler route, and pointed out that reading the legislative history of Section 111 makes it clear that it was not intended to be used by services over the internet.

While I had bounced around on this earlier, I actually think that the court is probably right here, in terms of what Congress' intent was.

There still are some troubling parts to the ruling, mainly concerning purely faith-based claims by Judge Denny Chin that a service like ivi creates irreparable harm to the TV networks. Chin specifically claims that if ivi streams the videos online it hurts the networks:

First,
ivi's live retransmissions of plaintiffs' copyrighted
programming over the Internet would substantially diminish
the value of the programming.

I don't see how that's true at all -- and it's certainly not obviously true. In fact, it could increase the value of the programming by making it easier and more convenient for more people to watch. Judge Chin tries to back up this statement by arguing that because the TV guys often sell ads targeted at specific segments and times, this could mess with that:

Plaintiffs broadcast their
copyrighted programming to various communities at different
scheduled times, for example, based on time zone or local
network provider. For this reason, negotiated Internet
retransmissions -- for example, on Hulu.com -- typically
delay Internet broadcasts as not to disrupt plaintiffs'
broadcast distribution models, reduce the live broadcast
audience, or divert the live broadcast audience to the
Internet.

If ivi were allowed to continue retransmitting
plaintiffs' programming live, nationally (and arguably,
internationally), over the Internet, and without plaintiffs'
consent, ivi could make plaintiffs' programming available
earlier in certain time zones than scheduled by the
programs' copyright holders or paying retransmission rights
holders. ivi's retransmissions of plaintiffs' copyrighted
programming without their consent thus would devalue the
programming by reducing its "live" value and undermining
existing and prospective retransmission fees, negotiations,
and agreements. ivi's retransmissions would dilute
plaintiffs' programming and their control over their
product.

But... that makes no sense. If that's true, then one could just as easily make the same argument about VCRs or DVRs. Yes, they disrupt the "traditional" way that a certain industry's business model works, but that doesn't necessarily mean that it's automatically diminishing the value of the original. After all, the TV guys made the same arguments about both VCRs and DVRs and now most of them admit that the DVR has actually helped their business by increasing the value of shows by making them more easily watchable by people. There's no reason to think the same thing wouldn't be true here.

In the end, as we argued from the beginning, the situation with ivi and Aereo (and Zediva and others) is silly. They're all looking for loopholes in the law to do what should clearly be allowed anyway. But because of the ridiculously expansive nature of copyright law, which is allowing legacy players to kill off new technologies, such things aren't allowed. And we end up with results like this, where an interesting concept (even if it tried to jump through crazy legal hoops) is flat out declared to break the law and shut down. Innovation be damned. NBC has to sell you more diapers via the commercials it's always sold in prime time. And you're not allowed to mess with that.

from the how-do-you-define-your-antenna dept

We've been covering the ridiculous legal fight over Aereo for a few months now. If you don't remember, Aereo is a company that offers -- for a fee -- to let people watch over-the-air broadcast TV (not cable, so just the small number of broadcast stations) online. Basically, what they do is set up antennas in a building in Brooklyn -- with one antenna per customer -- and then connect that antenna to the internet so the person can watch. The TV broadcasters flipped out and sued.

As we've noted, in essence, this is another lawsuit that asks the question: do the copyright rules change depending on the length of your cable. That is, we know that it's legal to put up an antenna yourself and watch what you get. That's how broadcast TV works. We also know that it's almost certainly legal (it hasn't directly been tested) to take the legal TV you are accessing and then place-shift it so you can watch it over the internet (like with a Slingbox). So, if you combine those two things, why would it suddenly be illegal? The only real difference is that the antenna and the place shifting device sit in Aereo's building rather than in your own home. So, it's just that the "cable" length between the users and the devices is longer. Why should the length of the cable determine whether something is infringing or not? In a few related legal cases, the rulings have been mixed.

There was the ivi case, where the company offered a very similar service, but went with a different legal theory (relying on compulsory licensing rules)... which has so far been shot down in court. Then there was the Zediva case which relied on a very similar theory, but with DVDs (i.e., the company had a separate DVD player for each customer and let you watch movies streamed from that individual player). In that case, the court issued an injunction and the company shut down. Finally, there's the Cablevision ruling in which the TV guys went after Cablevision for offering a remote DVR feature. In a somewhat convoluted, but important, ruling, it was found that a remote DVR could be legal and non-infringing.

While the networks seriously argued that anything that caused anyone to think about cancelling their cable subscriptions could be illegal, the judge in the Aereo case, Alison Nathan, has refused to grant a preliminary injunction (basically doing the opposite of what happened in the Zediva ruling). Zediva was in a different court (and only reached the district court level anyway) so that ruling had little direct influence here. The Cablevision ruling, however, was pretty clearly instrumental in saving Aereo from being shut down.

Much of the ruling focused on what seems like a relatively tangential question: whether Aereo is really creating an individual antenna for each customer, or if it's just building a giant single antenna. More or less, it's a question of whether or not each individual antenna works with the others to better capture the signal. This is also known as a totally stupid debate. I mean, if you were to step back and just look at this from a common sense standpoint, you'd say the fact that Aereo has to set up a different antenna for each customer is pretty stupid. There's no technical reason to do so, only a legal one. It is an expense that serves only to satisfy a legal demand, which is by definition an inefficiency introduced into the market for no reason other than to keep lawyers happy.

But, here, the judge ruled that the individual antenna theory applies, and thanks almost entirely to the Cablevision ruling, there's no reason to issue a preliminary injunction. The networks tried some bizarre theories about why Cablevision didn't apply, but the judge saw through all of the attempts at misdirection:

Despite this creative attempt to escape from the express holding of Cablevision, for the
reasons discussed below this Court finds itself constrained to reject the approach Plaintiffs urge.
Contrary to Plaintiffs' arguments, the copies Aereo's system creates are not materially
distinguishable from those in Cablevision, which found that the transmission was made from
those copies rather than from the incoming signal. Moreover, Plaintiffs' attempt to distinguish
Cablevision based on time-shifting fails when confronted with the reasoning of that case,
particularly considering that the Second Circuit's analysis was directly focused on the
significance of Cablevision' s copies but did not say one word to suggest that time-shifting played
any part in its holding.

From there, the ruling goes into a wonderfully thorough debunking of the networks' attempt to ignore the ruling in Cablevision and a detailed explanation for why Aereo is quite similar to Cablevision. In the end, the judge also bars the preliminary injunction due to the lack of irreparable harm if the service keeps going for the duration of the trial. The court actually says that it can see how there is a clear case that the networks could suffer irreperable harm, in the form of losing viewers and advertisers -- but that since that "harm" is a longterm one, there's little reason to issue an injunction right now. Separately, the court recognizes that an injunction would almost certainly be "irreparable harm" for Aereo, as it would effectively be a death sentence (as was the case with Zediva). Either way, however, the level of detail the court uses in laying out why Aereo is so similar Cablevision does not bode well for the networks' overall case.

This case is far from over, but in round one, the networks' key argument appears to have taken quite a beating.

from the questions-questions dept

Well, this was no surprise. As plenty of people predicted, the Barry Diller-backed startup Aereo has been sued by the TV networks in two separate lawsuits (one from Fox, Univision and PBS -- when have Fox and PBS ever worked together on anything? -- and one from ABC). If you haven't followed it, Aereo is a system to let people access broadcast over the air television (i.e., no cable/satellite channels -- just yours basics) via their computers, with some additional DVR-features. The way it works (as we explained last year when Aereo went by the name Bamboom) is that Aereo, for a subscription fee, sets up an antenna just for you to capture the over-the-air signals, connects it to a DVR-like device that you can then log into over the internet. Makes some amount of sense, though it's really yet another example of how kludgey companies have to be to provide what should be readily available already.

The TV networks hate, hate, hate this because they've been raking in oodles of cash from carriage fees from the cable and satellite guys. That's how much cable and satellite has to pay to "retransmit" the local broadcast channels, and it's become a huge, multi-billion dollar business that the TV guys have no interest in giving up in any way, shape or form. It's the reason why you probably hear stories on a regular basis about some cable or satellite network will no longer carry a certain broadcast channel... leading to a lot of posturing and such before one side eventually backs down (often after a short blackout period).

If this whole thing sounds familiar, that's because Aereo has a lot of similarities to a variety of other attempts to offer video online. There are three key cases that Aereo clearly resembles in one form or another -- but since the rulings aren't entirely consistent (yay) who knows where things will end up. I will say that, as with previous cases, this one really comes down to whether or not the length of a cable changes the copyright status of a piece of video content. I find that, when you reduce it to that level, the whole legal question automatically becomes a preposterous one. Tragically, however, courts seem to want to contort themselves into a variety of knots to stop things that they don't like. Anyway, the similar stories:

First up, we've got the ivi case, which may seem like the most similar in terms of offerings, but may actually be the least similar in terms of legal issues. ivi also offered (for a subscription fee) access to over the air broadcast channels via the internet. However, the method and legal arguments were somewhat different. ivi tried to mainly rely on Section 111 of Copyright law, which was what established a compulsory licensing system for cable systems to retransmit network television. Thus, it tried to argue that it was the equivalent of a cable system, and could get by with the compulsory rates.

So far, it hasn't fared well in court. While the products are similar to the end consumer here, the method and legal arguments are pretty different. For what it's worth, the lawsuit against Aereo was filed in the same court as the one against ivi.

The second case is the Zediva case. This one is actually much closer legally to Aereo, even if the products are somewhat different. Zediva worked by having a bunch of network-enabled DVD players in a data center. If you wanted to "rent a movie" online, you could do so, and a physical DVD would be put into a physical DVD player and streamed to you online. Zediva legally purchased the DVDs and argued that this was really no different than having a DVD player next to the TV. It's just that the cable is much longer. The similarities to Aereo are pretty obvious. Both involve a separate physical device at a central location being assigned to an end-user, and then content streaming from that device.

Unfortunately for Aereo, Zediva has also not fared well in court -- a ruling that does not bode well at all for Aereo. The most troubling part of the Zediva ruling was that watching a DVD in your own private home, even if it was solely being streamed to you direct from a DVD player that only you could access for the duration of the movie, was considered a public performance. This seems like a pretty ridiculous reading of the law to some of us, but if the court in the Aereo case reads the law the same way, Aereo is sunk. The only slight ray of hope here may be that the Zediva case was in the Central District of California, rather than the Southern District of NY where the Aereo case is (and the ivi case was as well).

The other "ray of hope" comes from the Cablevision ruling, which noted that a hosted DVR device could be legal and non-infringing, though it involved a horribly convoluted legal argument for the court to reach the conclusion it wanted, focusing on the legality of fleeting buffer copies. This is a ruling that the industry would love to kill off if it could. The good news here, beyond the nature of the ruling, is that this ruling came in the 2nd Circuit appeals court, which is precedent setting for the Southern District of NY where the Aereo case is taking place. It's not a direct comparison, but this ruling could conceivably help in at least one key part of the case.

On the whole, I'd say that Aereo's chances of prevailing are pretty slim no matter what. So far, it seems like the courts tend to use more of a "does this feel different enough to break the law" type of approach.. and then work out ways to make the ruling agree with that. However, if they do prevail here, it will set up an interesting split with the Zediva ruling -- though, it won't be that meaningful, because Zediva more or less ran out of money and gave up on its lawsuit before it reached the appeals court level.

However, as I've noted with all of these services, all they really seem to do is highlight how ridiculous copyright law is both in the contortions it forces companies to go through to try to stay within the letter of the law, and the equally ridiculous contortions that the courts then have to go through to move those lines to claim that these things are infringing in some manner. I still really don't see the point of either ivi or Aereo, but I'm troubled that they're not even allowed to exist. The thing is, if this content was just made available online in an easy, open and convenient manner -- as it is over the airwaves -- then there wouldn't be any issue here at all. But it's not, and thus we get these companies that have to do all kinds of acrobatics to try to legally offer a service... only to see them get sued out of existence for daring to try to stay within the letter of the law, rather than just saying "to heck with it" and setting up a site offshore that provides unauthorized streams in the most efficient manner.

Fundamentally, what this comes down to is the simple question of whether or not copyright law is different if the cord between your TV and the device that brings content to your TV is a matter of feet or a matter of miles. It's clearly legal to watch and record over-the-air TV in your own home with your own antenna (or to watch a movie on a DVD player). The only real difference here is that, rather than a cable running a few short feet from your TV to an antenna or a DVD player next to it, the TV is hooked up to the internet, and the "cable" in question is miles long to a data center... where it connects to a nearly identical antenna or DVD player. To me, it makes no sense at all to say that those two scenarios have different legal outcomes. And, indeed, that appears to be the argument that Aereo is making:

Aereo does not believe that the broadcasters’ position has any merit and it very much looks forward to a full and fair airing of the issues.

Consumers are legally entitled to access broadcast television via an antenna and they are entitled to record television content for their personal use. Innovations in technology over time, from digital signals to Digital Video Recorders (“DVRs”), have made access to television easier and better for consumers. Aereo provides technology that enables consumers to use their cloud DVR and their remote antenna to record and watch the broadcast television signal to which they are entitled anywhere they are, whether on a phone, a tablet, a television or a laptop.

from the legality's-a-mess dept

And here we go again. Peter Kafka has the details of a new company, called Bamboom, which will let people stream broadcast TV to their iPads, and which must be waiting for the inevitable lawsuit. The idea appears to be a mix of ivi and Zediva.

If you remember, ivi is the company that wants to stream broadcast television, and is claiming it's legal based on a questionable interpretation of current copyright laws -- an interpretation that (so far) the courts aren't buying. Zediva, on the other hand, is offering streaming DVDs by literally placing DVDs in DVD players and streaming just that one copy to users, relying on the Second Circuit court's ruling in the Cablevision case to suggest that if you can do something legally in your living room, it should also be legal to be done at a hosting center. In other words, it's arguing that the length of the cord shouldn't matter. If a DVD player is in your home or in a data center a few miles away, does it matter if the process (put DVD in player, watch on screen) is the same? The MPAA has sued and Zediva is currently fighting that lawsuit (with some impressive legal horsepower).

Bamboom basically appears to be using both of these arguments. It's streaming broadcast TV only, and is also assigning a single antenna to each user who is streaming.

The company is still going to get sued, of course. The TV companies wouldn't have it any other way. But, really, all it demonstrates is how ridiculous the laws are here. This company has to set up a ridiculously convoluted technical system that is not at all efficient and is downright wasteful, just to provide a simple service that is technically easy to provide if legal complications didn't get in the way. I don't think the service is particularly useful (do people still watch broadcast TV?), but that doesn't mean it should be illegal.

from the playing-games-with-the-law dept

A few months back, we wrote about a company called ivi, which was trying to use some legal loopholes to stream broadcast TV online. It was basically trying to use a part of the law (Section 111 for those playing along with the home game) that was designed to make it easier for cable stations to rebroadcast network TV. However, the court is not buying it and has issued a preliminary injunction ordering the site to shut down its service. The court points out that ivi isn't just playing a single loophole game, but it's really trying to thread the needle through two separate loopholes. For the strategy to work, not only does Section 111 have to apply to the internet provider, but at the same time, it has to exempt itself from the Communications Act. The court suggests this tapdance is too much to take:

In other words,
defendants argue that ivi is a cable system for purposes of the
Copyright Act, and thus may take advantage of the compulsory
license, but that it is not a cable system for purposes of the
Communications Act, and thus it need not comply with the
requirements of that Act and the rules of the FCC promulgated
thereunder.

The thing is, the more I read the details, the more I actually think that ivi's legal argument makes sense, even if the court disagrees. The problem here is the way the laws are written. A strict reading of Section 111 certainly suggests that ivi probably qualifies and can rebroadcast network TV with a nominal payment to the Copyright Office. At the same time, it's true that the Communications Act almost certainly doesn't apply to ivi, because it doesn't cover the internet. In other words, ivi's careful loophole threading seems to make sense. The more reasonable response from the court wouldn't have been to shut it down, but to allow it to go forward -- and for Congress to determine if that loophole should or should not exist (meaning the TV industry lobbyists step in and Congress shuts the loophole).

All that said, this whole fight seems pretty silly. I still don't understand why the TV networks are that upset by ivi, and I still don't see how ivi has a business model that's particularly compelling or sustainable. The networks might have been better served by just letting ivi flop on its own. I can't see too many people willing to pay up just to get broadcast TV...